Gold Prices Likely to Fall Further
NEW DELHI: Gold prices have fallen again, and it’s got nothing to do with Olympian Michael Phelps bagging it all! The yellow metal lost around Rs 550 per 10 gram on Saturday to close at Rs 11,221 per 10 gram on the multi commodity exchange.
Silver, too, fell by Rs 2,200 per kg to close at Rs 19,418 per kg. In fact, the white metal has lost 21% in the last one month, a fall much sharper than gold whose prices fell by over 17%.
Experts say the fall is because of the drop in crude oil prices from around $145 per barrel to around $113 in the international market and appreciation of dollar against other currencies.
A banker dealing in bullion predicted more selling pressure from those who had built up a buy position in the futures market in expectation that gold price would go up. A senior trader said prices may go down further in the near future.
Gold prices fell sharply on Saturday as the market opened after the I-Day holiday because of the steep fall in international prices in the intervening period. During the last intra-day trade in New York, gold prices fell sharply to a low of $773.90 per ounce (one ounce is equal to 31.1 gram) from 811.25 per ounce due to firming up of dollar against euro and other currencies.
Dev Mitra of World Gold Council said appreciation of dollar against euro had led to the fall in the gold prices in the international market. As the crude oil prices fell sharply in the last one month, there is speculation that the slowdown in the global and particularly in the US economy had been contained. This has made the dollar appreciate against other currencies. With apprehensions of rising inflation receding in the global market, investment in precious metals like gold to hedge against depreciation in the currency is declining.
Mitra said the correction in gold price was expected as demand has dwindled. Demand for gold in the April-June quarter of 2008, according to the World Gold Council report, fell by 45% to 161.40 tons as against 296.10 tons in the same period last year. The investment demand of the yellow metal during the quarter fell by 41% to 43.40 tons from the same period last year. The fall in the demand for jewellery is even steeper at 47% to 118 tons during the same period.
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